Financial Results for the Fiscal Year Ended October 31, 2015
[Japan GAAP] (Consolidated)
Date:

December 9, 2015

Company:

Tomoe Engineering Co., Ltd. and Subsidiaries(URL: http://www.tomo-e.co.jp/index_e.html)
stStock exchange listing:

1 Section, Tokyo Stock Exchange

Head Office:5-15, Kitashinagawa 5-chome, Shinagawa-ku, Tokyo, Japan

President:

Hitoshi Yamamoto

Investor Relations Contacts: Toshiaki Yakura, Director, General Manager of Accounting Division, Tel: (03) 3442-5127
Date of Annual Shareholders Meeting: January 28, 2016
Date of Dividend Payment:

January 29, 2016

Date of Financial Statement: January 28, 2016
Preparation of Supplementary Explanatory Materials for Annual Operating Results: Yes
Briefing Session for Annual Operating Results: Yes (for institutional investors)* Any fractional sums less than one million (or one thousand) yen are disregarded
1. Consolidated Financial Results for the Year Ended October 31, 2015
(1) Results of Operation (Consolidated)(Percent: change from the previous year)
Operating Income
Ordinary Income

Sales(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)

Year Ended
October 31, 2015
39,354
-3.3
1,387
8.9
1,703
Year Ended
October 31, 2014
40,714
6.6
1,273
-16.0
1,629
(Note) Comprehensive income
Fiscal year ended October 31, 2015: 1,239 million yen (-10.9%)
Fiscal year ended October 31, 2014: 1,390 million yen (-3.4%)
Net Income
Net Income
Return on Return on
Diluted Net
per Share
EquityAssetsIncome per
Share(Millions of Yen)

(Percent)

(Yen)

(Yen)

4.5
-3.0

Return on
Sales(Percent)(Percent)(Percent)

4.2

5.0

3.5

4.7

4.8

3.1

Year Ended
08
October
31,
1,028
-6.7
103.
2015
Year Ended
54
October
31,
1,103
31.1
110.
2014
(Reference) Equity in earnings (loss) of unconsolidated subsidiaries and affiliates
Fiscal year ended October 31, 2015: None
Fiscal year ended October 31, 2014: None
(2) Financial Condition (Consolidated)
Total Assets (A)Net Assets (B)Net Assets Ratio (B / A)

Net Assets per Share(Millions of Yen)

(Millions of Yen)

(Percent)(Yen)

34,341

25,20073.4

2,525.

33,81723,94370.8

2,399.

Year Ended
October 31, 2015
Year Ended
October 31, 2014

1

47

53

(Reference) Net assets
Fiscal year ended October 31, 2015: 25,200 million yen
Fiscal year ended October 31, 2014: 23,943 million yen(3) Cash Flows (Consolidated)
Net Cash Provided(Used) by Operating
Activities
Year Ended
October 31, 2015(73)
Year Ended
October 31, 2014
525

Net Cash Provided(Used) by Investing
Activities

Net Cash Provided(Used) by Financing
Activities(Millions of Yen)
Consolidated Cashand Cash Equivalent
as of Year-end

(51)

(449)

5,295

(710)

(1,562)5,661

2. Dividend Status
Dividend per Share (Yen)
SecondThird QuarterEnd ofQuarter
Fiscal Year
50
22.50
22.
50
22.50
22.
50
22.50
22.

First Quarter
Year Ending October 31, 2014
Year Ending October 31, 2015
Year Ending October 31, 2016 (Prospect)

-

Total
00

45.
00
45.
00
45.

Total Dividend

Dividend Payout Ratio(Consolidated)

Dividend on Equity Ratio(Consolidated)(Millions of Yen)

(Percent)(Percent)

449
449

40.7
43.7
68.0

1.9
1.8

Year Ending October 31, 2014
Year Ending October 31, 2015
Year Ending October 31, 2016 (Prospect)

3. Forecast for the Year Ending October 31, 2016 (Consolidated)(Percent: Change from the previous year for the full business year and 6-month period)
Sales

Operating Income

Ordinary Income(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)

Six-month Period

20,600

2.6

710

-24.0

710

-38.9

Full Business Year41,800

6.2

1,320

-4.9

1,330

-21.9

Net Income

Net Income per Share(Millions of Yen)

(Percent)(Yen)

Six-month Period

350

-62.1

35.

Full Business Year

660

-35.8

66.

08
14

2

Notes(1) Significant changes in subsidiaries during this period (changes in specific subsidiaries involving changes in thescope of consolidation): Yes
Elimination: Interstella Plastics (Shenzhen) Co., Ltd.
(2) Changes of the principles, procedures, and representation of the accounting policies
1) Change due to revision of accounting standard: Existing2) Other changes than the above 1): None
3) Change in accounting estimates: None
4) Retrospective restatements: None
For details, please refer to (Changes in accounting policies) of (5) [Notes for Consolidated Financial
Statements] of 4. [Consolidated Financial Statements] on page 20(3) Number of outstanding shares (Common stock)1) Number of outstanding shares at year-end (including treasury stocks)
At October 31, 2015: 10,533,200 shares

At October 31, 2014: 10,533,200 shares

2) Number of treasury stocks at year-end
At October 31, 2015: 554,667 shares

At October 31, 2014: 554,667 shares

3) Number of average shares
At October 31, 2015: 9,978,533 shares

At October 31, 2014: 9,978,566 shares*Presentation Concerning Implementation of Audit ProceduresThis financial report is exempt from audit procedures based on the Financial Instruments and Exchange Act. At thetime of disclosure of this financial report, the Company has not completed the audit procedures for financial statements
based on the Financial Instruments and Exchange Act.
*Explanations for appropriate use of the earnings forecast and other special instructions
The forward-looking statements such as a forecast of our financial results described herein are based on theinformation currently available to us and certain assumptions that we believe are reasonable. Actual results could differ
materially due to various factors. For assumptions of the forecasts and necessary precautions, refer to (1) [Analysis ofOperating Results] of 1. [Operating Results and Financial Condition], on page 5.

3

Table of Contents
1. Operating Results and Financial Condition……………………………………………………………………………..5(1) Analysis of Operating Results ……………………………………………………………………………………....5(2) Analysis of Financial Condition………………………………………………………..…………………………..6(3) Basic Policy for Profit Sharing and Dividends for Fiscal 2015 and 2015………………………………….......8(4) Risk Factors in Business……………………………………………………………..…………………………….8
2. Management Policy………………………..……………….…………………………………..…………………………10(1) Basic Management Philosophy………..…………..…….…………………………..……………………………10(2) Target Management Indices………..…………..…….………..……………………..……………………………10(3) Mid- and Long-term Management Strategy…..…….………..……………………..……………………………10(4) Challenges to be Addressed…..…….………………….…….……………………..……………………………10
3. Basic Approach to the Selection of Accounting Standards.………………………………………………………....11
4 Consolidated Financial Statements…………………………………..………………………………………………....12(1) Balance Sheets……………………………………………………………………………………………………...12(2) Consolidated Statements of Income and Statement of Comprehensive Income…………………………….14(3) Consolidated Statements of Changes in Shareholders' Equity………..………..……………………………16(4) Consolidated Statements of Cash Flows………………………………………………………………………...18(5) Notes for Consolidated Financial Statements…………………………………………………………………..20(Notes for premise of going concern)…………………………………………………………………………...20(Changes in accounting policies)………………………………………………………………………………...20(Additional information)……………………………………………………………………………………….20(Segment information) ……………………………………………………………………………………………...21(Per Share information)………………………………………………………….…………………………………24(Significant subsequent events) ………………………………………………………………………………….24

4

1. Operating Results and Financial Condition(1) Analysis of Operating Results[1] General condition of the current consolidated fiscal year
General operating results
During the consolidated fiscal year, Japan’s economy was supported by the economic recovery in the UnitedStates and other advanced countries, a rebound in exports, and the gradual improvement of the employment andincome situation, and personal consumption improved briskly. More recently, however, the pace of the recovery
has slackened against the backdrop of widening moves by firms to pull back from capital investment, as
uncertainty regarding the business outlook has grown stronger. Overseas, the U.S. economy has maintained its
recovery trend. On the other hand, beginning with China, the economies of newly developing countries continue
to slow, and as the economies of resource-producing counties weaken further under the influence of low crude oil
prices, an opaque situation persists.
As a result of the above, full-year consolidated net sales for the Tomoe Engineering Group fell 3.3% from theprevious consolidated fiscal year to 39,354 million yen. In the Machinery & Equipment Business, net sales ofequipment and construction were off, while in the Chemical Products Business net sales for the domestic plastics
sector also decreased. With respect to earnings, operating income was 1,387 million yen, 8.9% up from theprevious consolidated fiscal year, with the growth in sales of highly profitable components and repair services in themachinery business being a principal factor. Furthermore, an increase in foreign exchange gains contributed toordinary income, which came to 1,703 million yen, 4.5% up from the previous consolidated fiscal year. On theother hand, net income was 1,028 million yen, 6.7% down from the previous consolidated fiscal year, despite thereporting of a gain on sales of investment securities and other in extraordinary income, as the Tomoe EngineeringGroup reported an asset impairment write-off of consolidated subsidiary noncurrent assets in extraordinary losses.
[Summary by business segment](Machinery & Equipment Business)
In the Machinery & Equipment Business, consolidated net sales for the fiscal year were 9,428 million yen, 7.6%
down compared with the previous fiscal year, because of lower sales of machinery, equipment and construction fordomestic public sector demand and overseas demand and reduced sales of machinery for domestic private sector
demand.
From an earnings aspect, operating income came to 277 million yen, 75.6% up compared with the previous fiscal
year. Although net sales for the business as a whole contracted, earning were boosted mainly by the growth insales of highly profitable components and repair services for domestic public sector demand.
(Chemical Products Business)
In the Chemical Products Business, sales in the industrial materials sector for additive for use in aluminum alloy,
and housing and construction applications, and sales in the electronics materials sector of transport trays forsemiconductor manufacturing applications remained strong, but sales in the domestic plastics sector ofcommodity and high-performance plastics decreased. As a result, full-year consolidated net sales were 29,925
million yen, 1.9% down from the previous fiscal year.
With respect to earnings, operating income was 1,110 million yen, 0.5% down from the same period one year
earlier. Factors behind this performance included the decline in net sales of the domestic plastics sector, andthe declining profitability because of a contraction in sales in the plastic compounding business in Shenzhen,
China.
[2] Outlook for the next fiscal year (November 1, 2015 - October 31, 2016)
During the fiscal year ending in October 2016, Japan’s economy is forecast to continue its slow-motion recovery,
even though firms are expected to maintain restraints on production in conjunction with inventory adjustments.
Exports are projected to increase gradually, supported by the recovery of the economies in advanced countries

5including the U.S., while investments in plant and equipment will enjoy a turn-around and increase, mainly
because of upgrade investments against the backdrop of strong corporate earnings, and personal consumption
will remain brisk, lifted by improvement in the employment and income situation. On the other hand, overseas
the U.S. and advanced country economies in areas such as the euro zone are improving steadily, but thedeceleration of China’s economy, and slowing trend that is evident in newly developing country economies
because of the slump in resource prices including the price of oil, is expected to continue, and the outlook for theenvironment surrounding the Tomoe Engineering Group is expected to remain uncertain.
Given such conditions, in the Machinery & Equipment Business we expect overseas sales for North and SouthAmerica oil wells to decline. Because we expect domestic sales of our low power centrifugal separators for
public sector demand, as well as sales to industries such as chemicals, foods, and pharmaceuticals for private
sector demand, to grow as we work to rebuild our Asian markets, however, we project consolidated net sales toreach 10,970 million yen, 16.3% up compared with the previous year, and operating income to be 310 million
yen, 11.9% up compared with the previous year. In the Chemical Products Business, domestically we expect
growth in sales of graphite products in the advanced materials sector, and we also see higher sales of resin raw
materials and higher sales of products at Tomoe Engineering (Hong Kong) and a recovery in the performanceof the Shenzhen plastic compounding business in China. As a result, although we project consolidated net
sales of 30,830 million yen, 3.0% up compared with the previous year, we project operating income to come to
1,010 million yen, 9.0% down compared with the previous year, because of the inability to absorb the increase
in selling, general and administrative expenses related to our domestic and Shenzhen plastic compounding
business.

As a result of these efforts, for the entire Tomoe Engineering Group in the consolidated fiscal year ending October
2016, we project net sales to grow by 6.2% to 41,800 million yen, operating income to decrease by 4.9% to 1,320
million yen, and ordinary income to decrease by 21.9% to 1,330 million yen because we do not anticipate gains on
foreign exchange that contributed to the income in the previous year. Because we do not anticipate any special
factors, including extraordinary income or losses, we project net income attributable to the shareholders of the parent
company to decrease by 35.8% to 660 million yen.
The operating results forecasts for the next period described above are based on information available to theCompany at the time the forecasts were prepared and assumptions judged to be reasonable. Actual operating
results might differ from these forecasts depending upon changes in domestic and international financial andeconomic conditions, the supply and demand situation, various risk factors and other uncertainties.
(2) Analysis of Financial Condition[1] Assets, Liabilities, and Net Assets
Assets at the end of the current consolidated fiscal year were 34,341 million yen, up 523 million or 1.5% from thebalance at the end of the previous consolidated fiscal year, reflecting lower cash and deposits and guarantee
deposit, and increase in notes and accounts receivable-trade and asset for retirement benefits.
Liabilities were 9,140 million yen, down 733 million yen or 7.4% from the end of the previous consolidated fiscal
year, mainly because of lower payables, income taxes payable and advances received.
Net assets were 25,200 million yen, 1,256 million yen or 5.2% up from the end of the previous consolidated
fiscal year. This mainly reflected an increase of retained earnings reported at the current consolidated net
income, and an increase in the translation adjustments account associated with overseas subsidiaries,
which was affected by the depreciation of the yen.
As a result of the above changes, the equity ratio at the end of the consolidated fiscal year rose by 2.6
points compared with the end of the previous consolidated fiscal year to 73.4%.

6

[2] Cash Flow Status
Balance of cash and cash equivalent as of the end of the current consolidated fiscal year decreased by 366 million
yen to 5,295 million yen from the previous consolidated fiscal year. Status of each cash flow and their factors
during the current consolidated fiscal year are as follows:(Net Cash Provided by (Used in) Operating Activities)
Net cash provided by operating activities was 73 million yen (525 million yen provided during the previous
consolidated fiscal year). Income before income taxes and minority interests was 1,685 million yen, and notes
and accounts receivable-trade increased by 367 million yen, inventory increased by 349 million yen, and income
taxes paid were 872 million yen.
(Net Cash Provided by (Used in) Investing Activities)
Because purchases of plant, property and equipment were 419 million yen, and proceeds from sales ofinvestment securities were 156 million yen, and proceeds from lower guarantee deposits were 215 million yen,
the net amount of cash used in investing activities was 51 million yen (710 million yen used during the previous
consolidated fiscal year).
(Net Cash Provided by (Used in) Financing Activities)
Net cash used in financing activities was 449 million yen (1,562 million yen used during the previous consolidated fiscal
year), mainly for the payment of cash dividends of 449 million yen.
The trends in cash flow indices are as follows:
Trends in cash flow indices

Equity Ratio (Percent)
Equity Ratio Based on
Market Value (Percent)Year Ended
October 31,
2011

Year Ended
October 31,
2012

Year Ended
October 31,
2013

Year Ended
October 31,
2014

Year Ended
October 31,
2015

64.5

66.0

69.8

70.8

73.4

42.5

39.7

46.6

51.7

44.3

Debt-repayment to Cash
Flow Ratio (Years)

0.3

0.8

1.7

0.2

-

Interest Coverage Ratio(Percent)

258.7

115.8

35.6

74.5

-

Equity ratio: Net assets/ Total assets
Equity ratio based on market value: Market capitalization of shares / Total assets
Debt-repayment to cash flow ratio: Interest-bearing debt / Cash flow
Interest coverage ratio: Cash flow /Interest payment(Note)
1. All indices are calculated on the basis of consolidated financial figures.
2. Market capitalization is calculated based on the number of outstanding shares excluding treasury stock.
3. Cash flow refers to net cash provided by (used in) operating activities.
4. Interest-bearing debt refers to all debt reported on the consolidated balance sheet for which interest is
being paid.
5. The debt-repayment to cash flow ratio and interest coverage ratio for the year ended October 31, 2015 arenot shown because they were negative.

7

(3) Basic Policy for Profit Sharing and Dividends for Fiscal 2015 and 2016
As its basic policy, the Tomoe Engineering Group will “implement appropriate, stable dividends by seeking toincrease internal reserves to reinforce our financial position and corporate strength, and by considering consolidated
operating results, the group’s medium-term business strategy and other factors in a comprehensive manner.”
Based on the above policy, we plan to pay a dividend of 45 yen per share, including the dividend of 22.5 yen per
share for the consolidated fiscal year ending on October 31, 2015, and the interim dividend of 22.5 yen per share.
For the dividend for the next consolidated fiscal year, we plan to pay 45 yen per share (including an interim dividend
per share of 22.5 yen), based on consideration of the outlook for consolidated operating results.
(4) Risk Factors in Business
The key areas of business risks of our group that might have significant influence on investors’ decision are as follows.
The following judgments are made based on the business information at the end of the current consolidated fiscal
year, although some forward-looking statements are contained.
[1] Influence of Foreign Exchange Fluctuation
Businesses of our group include exports and import in foreign currencies, and exchange rate fluctuations may
affect the values after translation into yen. Operating results and financial condition of our group might be affectedby the range of foreign exchange fluctuation although we make efforts to minimize exchange fluctuation risks byentering into forward exchange contracts. Since our group has overseas subsidiaries, we prepare financial
statements in foreign currencies. In preparing consolidated financial statements, there is a risk associated withexchange fluctuation when converting into yen equivalent.
[2] Potential Risk of Overseas Activities
Our group is engaged in marketing and manufacturing overseas, focusing on China and other Southeast Asian
countries. Our group will monitor the local situations with the greatest care and take appropriate actions on a timely
basis. However, our group’s operating results and financial condition might be affected by unforeseen
circumstances arising from local political conditions, governments, legal restrictions, taxation systems, customs,
etc.
[3] Risk Associated with Quality of Goods and Products
The products of our group are manufactured by paying due attention based on systematic quality control. The
products that require technical development might cause risk of having cost of repair and replacement. Also, since
our group is not directly involved in manufacturing of many of imported raw materials, defects that our group is notdirectly associated with may occur and we might be obligated to cease sales and collect such materials. Although
we are prepared to take prompt and appropriate actions to cope with the risks involved in quality of manufactured
products and commercial goods, it may affect our group’s operating results and financial condition to the extent of
the problem.
[4] Risks of New Investment
Our group is in a quest to pursue high-value-added business all the time. To do this, we must take measures suchas aggressive investment in some situations; however, these measures may involve higher potential risks thanconventional business risks. Even though we take such sufficient preparations and measures, some unexpected
events may result in affecting operating results and financial condition of our group.

8[5] Risks when a Natural Disaster Occurs
Our group is implementing various risk measures, including seismic performance improvements to buildings andstructures (including rental properties), preparation of emergency response procedures, data backup
enhancements and the introduction of a system to confirm executive and employee safety, and working to prepare
a business contingency plan (BCP). Although we are implementing such measures, however, there is a possibility
our production capacity or sales capabilities might be substantially reduced by the occurrence of a large-scale
natural disaster to which we cannot respond, and business opportunities could be lost and our operating results
and financial position might be affected as a result.

92. Management Policy(1) Basic Management Philosophy
Our basic management philosophy is to contribute to society and provide a good quality of life to people involved
through growth and development of our company with spirit of creation and entrepreneurship and to provide ourcustomers with high level of technologies and excellent products. Guided by this policy, we shall be engaged in
the manufacture and sale of machinery based primarily on solid-liquid separation techniques and importation ofunique and specialty raw materials for chemical industry.
(2) Target Management Indices
Rather than just aiming for a volume growth, in our Machinery & Equipment Business we always try to develop
and sell products that require specialized technology, while in our Chemical Products Business we seek to handle
unique, high value-added products that demand expertise, even if their market is not so large. To pursue thesegoals, we regard improvement of profitability as our primary management goal. As a management indicator formeeting these goals, we give highest priority to ordinary income, which directly expresses the nature and changeof profitability.
(3) Mid- and Long-term Management Strategy
The long-term management strategy of Machinery & Equipment Business is to develop new products, reduce
manufacturing cost, and expand business overseas, and that of Chemical Products Business is to discoverunique new commercial products, to seek new customers and to deploy business aggressively for overseas
markets.
To achieve continuous progress on our basic strategy, in November 2014 we formulated the Tenth Mid-termManagement Plan “Target 2016” (from November 1, 2014 to October 31, 2016). The plan is devoted mainly
to implementing measures based on the following policies after newly identifying the ideal approach toallocating management resources and capturing market share. More specifically, in the Machinery &Equipment Business, we will expand foreign sales centered on North and South America, China and Southeast
Asia, while increasing domestic sales of our low-power, energy-saving centrifuge. In the Chemical Products
Business, we set key strategies to increase overseas sales by developing new markets and new commercial
products mainly in Southeast Asian market, and to maintain our market share of the existing business byimplementing measures to meet customer needs. The forecasted consolidated operating results for the fiscal year
ending October 2016, the final year of our medium-term management plan period, are shown at the beginning ofthese financial results. Although we find ourselves at this time in circumstances under which we must anticipate asubstantial contraction of our business for oil wells in the North and South America markets, which are being
affected by the deterioration of the external environment, including the decline in crude oil prices, the Tomoe
Engineering Group will continue to aggressively address these various management challenges and move
forward to improve its operating results.
(4) Challenges to be Addressed
Although firms can be seen to be maintaining controls on production in conjunction with inventory adjustments,
Japan’s economy is expected to maintain its slow-motion recovery. Exports are being supported by the
economic recovery in the United States and other advanced countries and are rising gradually, while capital
investment also has reversed course and will pick up, mainly for upgrade investments, against the backdrop ofstrong corporate earnings. Moreover, personal consumption is expected to remain brisk, supported by10

improvement in the employment and income situation. Overseas, even as the economies in the U.S. and otheradvanced countries including the euro zone are recovering steadily, the slowdown trend in the economies of
newly developing countries is expected to continue because of the deceleration of China’s economy anddepressed prices for resources, including the price of oil, and the future of the environment surrounding theTomoe Engineering Group is expected to remain shrouded by opaque conditions. In addition, the Tomoe
Engineering Group recognizes that given such circumstances, achieving growth in its overseas businesses is apriority issue, and in the Machinery & Equipment Business we will concentrate our energies on rebuilding
operations by reviewing our organization in the Asian market, working to further strengthen our agent policy anddeveloping markets other than oil wells through our U.S. subsidiary. In the Chemical Products Business, we will
focus on expansion of our business territory through efforts to create new markets and commercial products
mainly in Southeast Asia, which is expected to grow. In Tomoe’s resin plastic compounding business at its
subsidiary in Shenzhen, China, the Company will undertake a rebuilding effort aimed at reinvigorating operating
results by specializing in products such as commodity plastics, and devoting more efforts to retaining existingcustomers and acquiring new customers and broadening the market., and will further strive to restore operating
results through the development of measures to boost production efficiency.
To steadily execute these issues, the Company’s policy is to train the human resources who will be responsible
for the Company’s globalization, and work to achieve sustained growth in both of the Company’s businesses
and bolster its capacity to generate stable earnings, by promoting management policies based on Tomoe’s 10th
Medium-Term Management Plan.
In the future we will strive to ensure management in full compliance with the letter and spirit of the law andimprove corporate ethics, and from a risk management perspective we will maintain efforts to create andenhance business contingency plans that envisage large-scale natural disasters.

3. Basic Approach to the Selection of Accounting Standards
At the present time the Tomoe Engineering Group has adopted Japan GAAP, based on factors such ascomparability between firms, and the Group’s policy concerning the application of IFRS will be to respond whilereferring to outside trends and other considerations.

114. Consolidated Financial Statements(1) Balance Sheets(Thousands of Yen)
Year Ended October 31, 2014

Year Ended October 31, 2015

Cash and Deposits

5,661,622

5,295,280

Notes and Accounts Receivable-Trade

14,321,437

14,575,274

Merchandise and Finished Goods

2,834,556

2,883,186

Work in Process

1,193,440

1,428,858

Raw Materials and Supplies

772,969

814,139

Deferred Tax Assets

579,233

415,636

Others225,244

170,571-5,251-5,30925,583,252

25,577,638

2,742,339

4,414,855

Accumulated Depreciation-1,533,884-1,554,623

Buildings and Structures, Net

1,208,455

2,860,232

Machinery, Equipment and Vehicles

4,045,863

4,105,001-3,346,731-3,469,389

699,131635,612930,711

1,934,976

2,581,210

120

1,102,854

1,094,481

Accumulated Depreciation-977,538-1,004,257

Others, Net

125,316

90,2235,544,824

5,521,164

451,969

362,505

Investment Securities

1,255,543

1,189,880

Guarantee Deposits

243,293

83,645

Net Defined Benefit Assets

596,943

1,506,899

Deferred Tax Assets

36,616-

Others

128,527

122,346

Allowance for Doubtful Accounts-22,995-22,775

Total Investments and Other Assets

2,237,928

2,879,996

Total Noncurrent Assets

8,234,723

8,763,665

Total Assets

33,817,976

34,341,304

AssetsCurrent Assets

Allowance for Doubtful Accounts
Total Current Assets
Noncurrent Assets
Property, Plant and Equipment
Buildings and Structures

Accumulated Depreciation
Machinery, Equipment and Vehicles, Net
Land
Construction in progress
OthersTotal Property, Plant and Equipment
Intangible Assets
Investments and Other Assets

12(Thousands of Yen)
Year Ended October 31, 2014

Year Ended October 31, 2015

5,970,933

5,836,44

Accounts Payable-Others

535,396557,504

Income Taxes Payable

543,046

182,965

Advances Received

431,020

105,602

Provision for Bonuses

731,676

701,392

Provision for Directors' Bonuses

36,90042,374

Allowance for Product Warranty

223,618

122,478

Others

305,463

269,841

8,778,056

7,818,605

Noncurrent Liabilities
Provision for Directors' Retirement Benefits

18,6805,460

Net Defined Benefit Liabilities

48,64654,052

1,028,769

1,262,702

Total Noncurrent Liabilities

1,096,096

1,322,214

Total Liabilities

9,874,153

9,140,820

Capital Stock

1,061,210

1,061,210

Capital Surplus

1,483,410
21,267,920

1,483,410

Liabilities and Net Assets
Liabilities
Current Liabilities
Notes and Accounts Payable-Trade

Total Current Liabilities

Deferred Tax Liabilities

Net Assets
Shareholders’ Equity

Retained Earnings-363,591

22,313,936-363,591

Total Shareholders’ Equity

23,448,949

24,494,965

Accumulated Other Comprehensive Income
Valuation Difference on Available-for-Sale
Securities
Deferred Gains or Losses on Hedges

305,484

330,518

1,272

748

Foreign Currency Translation Adjustment

311,609

Total Adjustment on Net Defined Benefit-123,493

415,072-40,820

Total Accumulated Other Comprehensive Income

494,873705,518

Total Net Assets

23,943,822

25,200,484

Total Liabilities and Net Assets

33,817,976

34,341,304

Treasury Stock13

(2) Consolidated Statements of Income(Thousands of Yen)
Year Ended October 31, 2014

Year Ended October 31, 2015

Net Sales

40,714,627

39,354,572

Cost of Sales

33,075,863

31,541,093

Gross Profit

7,638,764

7,813,479

Selling, General and Administrative Expenses

6,365,315

6,426,114

Operating Income

1,273,448

1,387,365

Interest income

20,36914,047

Dividends Income

122,927

26,557

9,100

6,932

Foreign Exchange Gains

178,251

257,943

Others54,85433,268385,503338,750

Interest Expenses

6,639

454

Commission Paid

9,475

9,500

Sales Discount

5,457

5,668

Others

8,025

7,148

Total Non-Operating Expenses

29,597

22,770Ordinary Income

1,629,354

1,703,344

Gain on Sales of Noncurrent Assets

3,784

27,383Gain on Sales of Investment Securities

13,79158,703Gain on Negative Goodwill

145,132－－

16,859

162,708

102,946

Loss on Sales of Noncurrent Assets

2,034

－

Loss on Retirement of Noncurrent Assets

7,220

－

－

120,646

9,255

120,646

1,782,807

1,685,644

Income Taxes-Current

820,640

519,874

Income Taxes-Deferred-132,776

137,177

687,863

657,052

1,094,944

1,028,591-8,089－1,103,033

1,028,591

Non-Operating Income

Rent Income

Total Non-Operating Income
Non-Operating Expenses

Extraordinary Income

Gain on Liquidation of Affiliated Company
Total Extraordinary Income
Extraordinary Losses

Loss on Impairment
Total Extraordinary Losses
Income before Income Taxes and Minority Interests

Total Income Taxes
Income before Minority Interests
Minority Interests Income
Net Income

14Consolidated Statements of Comprehensive Income(Thousands of Yen)

Income before Minority Interests

Year Ended October 31,

Year Ended October 31,

2014

2015
1,094,944

1,028,591

94,16425,033

693-523
103,462

Adjustment on Net Defined Benefit

200,751－

Total Other Comprehensive Income

295,608

210,645

1,390,552

1,239,237

1,387,656

1,239,237

2,896

－

Other Comprehensive Income
Valuation Difference on Available-for-sale Securities
Deferred Gains or Losses on Hedges
Foreign Currency Translation Adjustment

Comprehensive Income(Breakdown)Comprehensive Income attributable to Owners of the
ParentComprehensive Income attributable to Minority
Interests

15

82,672

(3) Consolidated Statements of Changes in Shareholders' Equity
Previous Consolidated Fiscal Year (Year Ended October 31, 2014)(Thousands of Yen)
Shareholders' Equity
CommonStock
Surplus during Previous
Fiscal Year
Changes during This
Fiscal Year
Cash Dividend Paid

CapitalSurplus1,061,210

Retained
Earnings

1,483,410

Net Income
Issued Shares
Reacquired
Total (Net) Amount
Changed (Except
Shareholders' Equity)
Total Amount Changed
Surplus during This Fiscal
Year

Issued Shares
Reacquired

20,838,441-363,462

Total Net
Assets23,019,599-673,554-673,554

1,103,033

1,103,033
-128

-128

―

―

429,479-128

429,350

1,061,210

1,483,410

21,267,920-363,591

23,448,949

Accumulated Other Comprehensive Income
Valuation
Difference on
Available-for-sale
Securities

Surplus during
Previous Fiscal Year
Changes during This
Fiscal Year
Cash Dividend Paid

211,320

Deferred
Gains or
Losses on
Hedges578

Foreign
Currency
Translation
Adjustment

121,844

Total Net
DefinedBenefit

Total Other
Comprehensive
Income―333,743

Minority
Interests

Total Net
Assets222,130-673,554

Net Income
Issued Shares
Reacquired
Total (Net) Amount
Changed (Except
Shareholders' Equity)
Total Amount
Changed
Surplus during This
Fiscal Year

23,575,473

1,103,033-128
94,164693

189,765-123,493

161,129-222,130-61,001

94,164693

189,765-123,493

161,129-222,130368,349

305,484

1,272

311,609-123,493

494,873―

23,943,822

16

Current Consolidated Fiscal Year (Year Ended October 31, 2015)(Thousands of Yen)
Shareholders' Equity
CommonStock
Surplus during Previous
Fiscal Year
Cumulative Effect of
Accounting Changes
Surplus Reflecting
Accounting Changes
Changes during This
Fiscal Year
Cash Dividend Paid

CapitalSurplus1,061,210

Retained
Earnings

1,483,410

Surplus during This Fiscal
Year21,267,920-363,591

466,457
1,061,210

1,483,410

Net Income
Total (Net) Amount
Changed (Except
Shareholders' Equity)
Total Amount Changed

Issued Shares
Reacquired

Total Net
Assets23,448,949
466,457

21,734,378-363,591

23,915,407-449,033-449,033

1,028,591

1,028,591――

579,557―

579,557

1,061,210

1,483,410

22,313,936-363,591

24,494,965

Accumulated Other Comprehensive Income
Valuation
Difference on
Available-for-sale
Securities

Surplus during
Previous Fiscal Year
Cumulative Effect of
Accounting Changes
Surplus Reflecting
Accounting Changes
Changes during This
Fiscal Year
Cash Dividend Paid

305,484

Deferred
Gains or
Losses on
Hedges1,272

Foreign
Currency
Translation
Adjustment

311,609

Total Net
DefinedBenefit-123,493

Total Other
Comprehensive
Income494,873

23,943,822
466,457

305,484

1,272

311,609-123,493

494,873

24,410,280-449,033

Net Income
Total (Net) Amount
Changed (Except
Shareholders' Equity)
Total Amount
Changed
Surplus during This
Fiscal Year

Total Net
Assets1,028,591
25,033-523

103,462

82,672

210,645

210,645

25,033-523

103,462

82,672

210,645790,203

330,518748

415,072-40,820705,518

25,200,484

17

(4) Consolidated Statements of Cash Flows(Thousands of Yen)
Year EndedYear Ended

October 31, 2014

October 31, 2015

Net Cash Provided by (Used in) Operating Activities
Income before Income Taxes and Minority Interests

1,782,807

1,685,644

Depreciation and Amortization

425,118

444,518

Increase (Decrease) in Provision for Bonuses(22,635)(32,360)

Increase (Decrease) in Provision for Directors' Bonuses

1,187

5,473

Increase (Decrease) in Allowance for Product Warranty
Increase (Decrease) in Net Defined Benefit Liability

43,420493(101,140)
4,893

Decrease (Increase ) in Net Defined Benefit Asset(65,760)

Increase (Decrease) in Provision for Directors' Retirement Benefits(111,891)－

Increase (Decrease) in Allowance for Doubtful Accounts(20,038)(162)

Interests and Dividends Income(143,297)(40,605)

6,639

454

Foreign Exchange Losses (Gains)(48,807)(34,092)

Loss (Gain) on Sales of Investment Securities(13,791)(58,703)

Gain (Loss) on Negative Goodwill(145,132)－

Loss (Gain) on Liquidation of Affiliated Company－(16,859)

Loss on Impairment－

120,646

Loss (Gain) on Sales of Noncurrent Assets(1,749)(27,383)

Loss on Retirement of Noncurrent Assets

7,220

－

(1,669,136)(367,977)

Decrease (Increase) in Inventories

333,587(349,869)

Increase (Decrease) in Notes and Accounts Payable-Trade(136,860)(56,535)

Increase (Decrease) in Accounts Payable-Others(20,552)

41,709

Increase (Decrease) in Advances Received

352,296(364,900)

Increase (Decrease) in Accrued Consumption Taxes

41,079(43,448)

Others, Net(15,706)

26,397644,253756,717

Interests and Dividends Income Received

146,785

42,225Interest Expenses Paid

(7,055)(454)(258,343)(872,427)

525,638(73,939)

Interest Expenses

Decrease (Increase) in Notes and Accounts
Receivable-Trade

Sub total

Income Taxes Paid
Net Cash Provided by (Used in) Operating Activities

18(13,220)

(Thousands of Yen)
Year EndedYear Ended

October 31, 2014

October 31, 2015

Net Cash Provided by (Used in) Investment Activities
Disbursement to Time Deposits(4,300,000)(3,200,000)

Proceeds from Withdrawal of Time Deposits

4,300,000

3,200,000

Purchase of Property, Plant and Equipment(564,310)(419,792)

8,727

51,888Purchase of Intangible Fixed Assets(126,478)(34,999)

Purchase of Investment Securities(15,901)(16,845)

Proceeds from Sales of Investment Securities

44,019156,049

Payments of Loans Receivable(6,386)(3,240)

Collection of Loans Receivable

2,007

3,068

Guarantee Deposits (Increase)

2,384

215,734(54,234)(3,684)(710,172)(51,822)Net Increase (Decrease) in Short-Term Loans Payable(751,299)－

Repayment of Long-Term Loans(56,534)－

Repayments of Lease Obligations

(775)

－

(79,894)

－

(128)

－

(673,554)(449,033)(1,562,188)(449,033)

236,498(1,510,223)
7,171,846

208,452(366,342)
5,661,622

5,661,622

5,295,280

Proceeds from Sales of Property, Plant and Equipment

Others, Net
Net Cash Provided by (Used in) Investment Activities
Net Cash Provided by (Used in) Financing Activities

Purchase of Stock from Minority Shareholders
Purchase of Treasury Stock
Cash Dividends Paid
Net Cash Provided by (Used in) Financing Activities
Cash and Cash Equivalents
Effect of Exchange Rate Change on Cash and Cash
Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of This Fiscal Year19

(5) Notes for Consolidated Financial Statements(Notes for premise of going concern)
There are no pertinent matters to report.
(Changes in accounting principles)
Beginning from the first quarter consolidated accounting period, the Company has applied the AccountingStandard for Retirement Benefits (Accounting Standards Board of Japan (ASBJ) Statement No. 26, referred to below
as “the Retirement Benefit Accounting Standard”) and the Implementation Guidance on Accounting Standard for
Retirement Benefits (ASBJ Guidance No. 25, referred to below as “the Retirement Benefits Implementation
Guidance”) under the provisions in the main clauses of Article 35 of the Accounting Standard for Retirement
Benefits and Article 67 of the Guidance on Accounting Standard for Retirement Benefits. The Company has
revised its calculation methods for retirement benefit obligations and service costs, and together with changing
its method for attributing projected retirement benefits to periods from the straight-line basis to the benefit
formula basis, also has revised its method for determining the discount rate, from a method based on thenumber of years approximate to the expected average remaining working lives of employees, to a method thatuses a single weighted average discount rate reflecting the estimated retirement benefit payment periods andamount per each estimated retirement benefit payment period.
To apply the Accounting Standard for Retirement Benefits, the Company has recognized the effect of thisrevision to its calculation methods for retirement benefit obligations and service costs by adjusting the balanceof retained earnings at the beginning of the current consolidated fiscal year in accordance with the transitional
provisions set forth in paragraph 37 of the Accounting Standard for Retirement Benefits.
As a result, net defined benefit assets increased by ¥725,010,000 yen, and retained earnings increased by¥466,457,000 yen, as of the beginning of the current consolidated fiscal year. The effect of this change on thecurrent consolidated fiscal year earnings is not material.
(Additional information)
With the promulgation of the Act for Partial Revision of the Local Tax Act (Act No. 2 of 2015) and the Act for Partial
Revision of the Income Tax Act Etc. (Act No. 9 of 2015) on March 31, 2015, Japan’s corporate tax rate and businesstax rate will be reduced in the consolidated fiscal year beginning on or after April 1, 2015. In conjunction with thischange, the statutory effective tax rate used to calculate deferred tax assets and deferred tax liabilities will be revised
from 35.64% applied in the past to 33.06% for temporary differences expected to be eliminated in the consolidated
fiscal year that begins on November 1, 2015, and to 32.26% for temporary differences expected to be eliminated in
the consolidated fiscal years that begin from November 1, 2016.
As a result, deferred tax liabilities (the amount after deducting deferred tax assets) have been reduced by
102,415,000 yen. In addition, income taxes-deferred reported for the current consolidated fiscal year decreased by
89,791,000 yen, valuation difference on available-for-sale securities increased by 14,631,000 yen and deferredgains or losses on hedges increased by 28,000 yen, and total adjustment on net defined benefit decreased by
2,036,000 yen.

20

(Segment information)
1. Summary of reporting segments
TOMOE Engineering Co., Ltd. has established two operational headquarters. These operational headquarters aredeveloping their business activities by planning comprehensive domestic and overseas strategies for the respective
manufactured and commercial products they handle.
We therefore have assumed these two businesses, referred to as the “Machinery & Equipment Business” and the“Chemical Products Business”, as our company reporting segments. The Machinery & Equipment Business mainly
manufactures and sells centrifuge decanters, and the Chemical Products Business mainly manufactures, stocks
and sells chemical industry products.
The Company’s reporting segments are those units of the Company’s for which discrete financial information isavailable and for which the Board of Directors regularly conducts a review for the purpose of making decisions about
resources to be allocated to the segments and assess the segments' performance.
2. Method for calculating amounts of net sales, income or loss, assets, liabilities and other items for each reporting
segment
The accounting methods for reporting segments are identical to the accounting methods adopted for preparation of
the consolidated financial statements.

3. Information concerning the amount of net sales, income or loss, assets, liabilities and other items for each reporting
segment
Previous Consolidated Fiscal Year (Year Ended October 31, 2014)(Thousands of Yen)
Amount ofConsolidated
Adjustment
Financial
Note 1
Statements
Reported
AmountReporting segment
Machinery &Equipment
Business
Sales
Sales to Unaffiliated Customers
Internal Sales Among
Segments or AmountTransferred
Total
Segment Income
Segment Assets
Other Items
Depreciation & Amortization
Increase in Property, Plant &Equipment and Intangible
AssetsChemical
Products
Business

Total

10,204,351

30,510,276

40,714,627

0

40,714,627

0

0

0

0

0

10,204,351
157,852
9,141,508

30,510,276
1,115,596
15,178,953

40,714,627
1,273,448
24,320,461

009,497,514

40,714,627
1,273,448
33,817,976

331,764

93,353425,118

0425,118

499,154

66,382565,536

66,4100

631,946(Notes)1. The adjustment amount for segment assets is the assets of the entire company that cannot be allocated to eachreporting segment, and is mainly idle operating funds (cash on hand and in banks), long-term investments(investment securities) and assets acquired in relation to a district redevelopment project.
2. The total amount for segment income agrees with the operating income reported on the Consolidated Statement of
Income.

21Current Consolidated Fiscal Year (Year Ended October 31, 2015)(Thousands of Yen)
Amount ofConsolidated
Adjustment
Financial
Note 1
Statements
Reported Amount

Reporting segment
Machinery &Equipment
Business
Sales
Sales to Unaffiliated Customers
Internal Sales Among
Segments or AmountTransferred
Total
Segment Income
Segment Assets
Other Items
Depreciation &Amortization
Increase in Property, Plant&Equipment and Intangible
AssetsChemical
Products
Business

Total

9,428,743

29,925,829

39,354,572

0

39,354,572

0

0

0

0

0

9,428,743
277,115
10,847,484

29,925,829
1,110,250
17,007,658

39,354,572
1,387,365
27,855,143

00
6,486,161

39,354,572
1,387,365
34,341,304

324,469

120,049444,5180444,518

242,854

195,246

438,1010438,101(Notes)1.The adjustment amount for segment assets is the assets of the entire company that cannot be allocated to eachreporting segment, and is mainly idle operating funds (cash on hand and in banks), long-term investments(investment securities) and assets acquired in relation to a district redevelopment project.
2. The total amount for segment income agrees with the operating income reported on the Consolidated Statement of
Income.
(Related information)
Previous Consolidated Fiscal Year (Year Ended October 31, 2014)
1. Information by product and service
The Company has omitted a description of information by product and service because this same information isdisclosed in segment information.
2. Regional Information
1. Net Sales(Thousands of Yen)

Japan

Asia

33,239,806

6,263,736

OthersTotal

1,211,084

40,714,627(Note)Net sales are classified by country or region based on the customer’s location.
2. Property, Plant and Equipment
Japan
5,033,485

Asia
192,041(Thousands of Yen)
OthersTotal

319,298

5,544,824

3. Main Customer Information
The Company has omitted a description of sales to outside customers because there are no customers to which sales
account for more than 10% of the net sales reported in the Consolidated Statements of Income.

22

Current Consolidated Fiscal Year (Year Ended October 31, 2015)
1. Information by product and service
The Company has omitted a description of information by product and service because this same information isdisclosed in segment information.
2. Regional Information
1. Net Sales(Thousands of Yen)

Japan

Asia

OthersTotal

32,109,163

5,358,191

1,887,218

39,354,572(Note) Net sales are classified by country or region based on the customer’s location.
2. Property, Plant and Equipment
Japan
5,157,870(Thousands of Yen)

Asia

Others

182,690

Total

180,604

5,521,164

3. Main Customer Information
The Company has omitted a description of sales to outside customers because there are no customers to which sales
account for more than 10% of the net sales reported in the Consolidated Statements of Income.
(Information concerning impairment losses on fixed assets by reporting segment)
Previous Consolidated Fiscal Year (Year Ended October 31, 2014)
There are no pertinent matters to report.
Current Consolidated Fiscal Year (Year Ended October 31, 2015)(Thousands of Yen)
Reported segments
Machinery &Equipment
Business
Impairment loss

120,646

Elimination at

Chemical
Products
Business

Subtotal
0120,646

the Company
0

Total

120,646(Information concerning amortization of goodwill and unamortized balances by reporting segment)
There are no pertinent matters to report.
(Information concerning gain on negative goodwill by reporting segment)
Previous Consolidated Fiscal Year (Year Ended October 31, 2014)
The Tomoe Engineering Group had a gain on negative goodwill in the Chemical Products Business in conjunction withthe acquisition of the stock of Interstella Plastics (Shenzhen) Co., Ltd., a consolidated subsidiary of Tomoe Engineering,which was owned by another company. The reported amount of the gain on negative goodwill as a result of thisacquisition was 145,132,000 yen.
Current Consolidated Fiscal Year (Year Ended October 31, 2015)
There are no pertinent matters to report.

23

(Per Share Information)
Year EndedYear Ended

October 31, 2014

October 31, 2015
53

Net Asset per Share¥2,399.

47¥2,525.

54

08

Net Income per Share
¥110.
¥03.
(Note 1) Income per share for this fiscal year after adjustment of the residual securities is not presented as there are noresidual securities.
(Note 2) Calculation basis for net income per share are as follows:Year EndedYear Ended

October 31, 2014

October 31, 2015

Net Income for this Fiscal Year (thousands of yen)

1,103,033

1,028,591

Net Income for Common Stock (thousands of yen)

1,103,033

1,028,591

Average number of Common Stock during the Fiscal Year9,978,566

9,978,533(Note3) Calculation basis for net asset per share are as follows:

Total for Net Asset in Consolidated Balance Sheet(thousands of yen)
Net Asset for Common Stock (thousands of yen)
Number of Common Stock used for calculation of Net Assets
per Share (share)(Significant subsequent events)
None
.

24

Year EndedYear Ended

October 31, 2014

October 31, 2015

23,943,822

25,200,484

23,943,822

25,200,484

9,978,533

9,978,533